COLOMBO, April 25 (Reuters) - Sri Lanka's parliament
approved a $400 million development by Australian casino
operator Crown Resorts Ltd on Friday, but said it would
not be allowed to open a casino there.

The hotel and shopping complex proposed by Australian
gambling tycoon James Packer's company is opposed by religious
leaders and opposition parties who fear it will eventually be
allowed to operate a casino, something they see as a threat to
traditional Buddhist morality.

Economic Development Minister Basil Rajapaksa said that
would not happen.

"We will not allow casinos. I emphasise that. They
(investors) asked (for permission for casinos), but we did not
grant permission and we will not allow it in future either," he
said at a heated debate in parliament.

Opponents expressed scepticism, noting that excluding a
casino at the resort had not been written into law.

"Why is the honourable minister misleading this house, the
entire country, and the Buddhist clergy? I have the gazette with
me," opposition lawmaker Joseph Michael Perera told parliament,
referring to the official journal that publishes legislation.

The gazette states that the Crown project will be a 400-room
tourist resort with shopping malls, offices and "associated
facilities". Opponents say that vague phrase might give the
company room to open a casino in the future.

Crown Resorts Ltd was not immediately available for comment.

Packer, one of Australia's richest men, first obtained
cabinet approval for Crown's projects in September, but the
terms were altered and the process has been delayed.

There are only a few, mostly small-scale, casinos in Sri
Lanka and opponents of bigger operations fear they would lead to
a boom in prostitution and damage religious values and culture
in the mainly Buddhist island nation.

Parliament approved two other projects: a $300 million
resort near Packer's planned complex, and a development called
Water Front by Sri Lankan conglomerate John Keells Holdings
, which also plans to include a casino, worth up to $850
million.
(Writing by Shihar Aneez; Editing by Robin Pomeroy)